"Municipal bonds Ted, I'm talking double A rating. . . the best investment in America."
Posted on 06/20/2019 8:22:33 AM PDT by sonrise57
One reason I recommend them both is that one of them will sometimes give advice that is the complete opposite of what the other recommends. The point isn't to agree with one or the other all the time, but to hear them both and understand how they approach a subject like long-term investment.
I would also recommend their books. Ric Edelman's classic The Truth About Money should be required reading for every American.
Good luck!
P.S. -- I agree with the other Freepers who have suggested investing in low-cost index funds. For someone investing a small amount of money it's the best way to get into a diversified group of stocks.
To funny!
My son practiced for a couple of months with an online tool (sorry I don’t know the name) that allowed for “fake” trading. Once he learned the ropes and started making money “fake” trading, he began investing for real. He mentioned he is using a commission-free trading site. I doubt he put two grand in as he is very tight with his money, but he has made nearly $500 in the past 30 days. Good luck to you.
Research mutual funds. DO NOT buy an individual stock! $2K will buy 100 shares of a $20 stock. DO not listen to some stock broker, they are salesmen. Again, invest it all in a broad based mutual fund. You will not get rich but you may do what the market does over time, 8-12% per year over a 40 year cycle. 8% compounded should double, taxes not considered, every 9 years. Unfortunately nothing is guaranteed. Were we to go into a deep recession you will lose money on paper and perhaps for some time. One way to mitigate that is to invest say 1/4 of your investment each year over the next 4 years. I personally like Vanguard funds but there are a lot of no load funds out there so do your research. One last point, do not listen to CNBC talking heads.
JNJ, D, MSFT, INTC, T, VZ, MCD, UNP, AAPL, PEP all come to mind.
The big markets are so "mechanical" now you will never be able to get ahead of the wave prior to the machines. Its just not going to happen.
I am going to suggest something a little crazy.
If you want to have fun, probably make some money, and get your juices going you can try cryptro trading.
It is the closest thing to trading during the dot com bubble. I made a ton of money from 2013 to 2017. Lost about half of it. And its back up now, poised to take off again (and then crash again.) And I have made a LOT of money in the past four months.
WARNING
My caveat is to go to your window and start throwing money out of it. Mark down where it started to feel like a mistake. That is how much you should spend on trading anything. And trading crypto--use ONLY money you do not want to see again. Period. It is a casino...with better payoffs. But the house ALWAYS wins. Remember that.
And to everyone else...the original poster is looking for a thrill, I am telling him not spend time playing in a PG world and go right to the X rated world of adrenaline rush trading frenzies.
I don’t tend to use it ... I have used the Value Line rating system in the past with good success ... but Value Line is fairly pricey with their products ... esp. when you are first starting out.
"Municipal bonds Ted, I'm talking double A rating. . . the best investment in America."
Maybe. A one time commission of $5-10.00 on $2,000 if he buys 62 shares of T with a 6.25% dividend VS $2000 of mutual fund that will probably fee him year over year a lot more than his dividend would have paid out. Oh, and dividend reinvestment for 20-30 years helps. ALOT.
I have been putting $50 a week intoi m drip portfolio. Every week. Since 1983.
Almost all of the stocks you have there...except Apple. I didn’t know they had a Drip.
Drips are fun, easy, and they force you to read. But most require $250 or $500 to start—although you can commit to a minimal deposit for 10 months to make them accessible.
Beat me to it...but in the early 80s, tax free muni coupons were 7-10%....sometimes with a TEY of 20%!!!!!!!
Today, you can only get a AA rated muni out long at a 2.52% on the MMD scale.
Seems like a person could get an index fund and buy it and sell it on the daily or weekly fluctuations. Then you’re not having to predict long term trends but just responding to variation about the recent mean. You wouldn’t make much on each trade but it would add up. Also, the indexes seem to respond in fairly predictable ways too headlines. Seems like you could keep an eye on the news and trade based on market responses if you’re quick.
The conventional wisdom, which is held by a lot of smart people and very well may be true, is that you can’t beat the market over time so you should stay put and be patient. But the cynical part of me says that’s just how “they” herd overly conservative, unresponsive investors into the markets to make their money available for nicking by those willing to hustle a little bit.
You get me, bro. One poster said booze, boats and broads. Too expensive and the thrill may be for only 10 minute (or less) in one case. My little hobby has the potential to make the thrill last a little longer.
I manage a 450MM in fixed income bank/insurance portfolios and $50MM some high net worth individuals. Zero mutual funds. The closest thing I have to a mutual fund is VYX and VOO in some custodial UGMA accounts related to the big hitters.
ETFs are a lot cheaper. I have been buying GLD around 111-120 in a few accounts 1QTR2019.
The best place to start is to figure out *why* you want to invest.
1) Speculation. Many people buy stock with the idea that it will go up in price, then they can sell it and make a profit.
Drawbacks to this are if it loses value, or even stays the same, you lose. And capital gains taxes if you win.
2) Interest, dividends or yield (IDY). That is, you invest the money and let it sit there and make you more money. You might have the IDY automatically reinvested so that over time your principle grows, and makes you more IDY. If you do this, you generally, but not always, only pay capital gains when you sell.
3) Risk. Generally proportional to IDY. Risk happens at all levels, from penny stocks and “junk” bonds with high risk to high quality stocks and tax free municipal bonds at very low risk.
The latter, tax free municipal bonds are a good place for new investors. A yield from a taxable investment has to be about twice as large to earn you the same money as from tax free.
Since municipalities only have to pay a small amount of yield for tf bonds, to keep their credit ratings, they almost never default on them. So very low risk.
Too old for coke....but the bourbon is nice. (I am kidding, I am so cheap, coke was always too expensive for me. No interest in spending all my time snorting Cadillacs up my nose!)
My only real advice to remember that risk management is the key to this hobby. Do your research. Assess your risk, and make your decision—all without emotion.
And no one ever went broke taking a profit.
Crypto trading is a rush though....Ha ha...
I was in a similar situation a few years ago when I wanted to roll over about $2,500 from an old 401(k) account from my first job in college.
I am NOT a financial advisor ... but I will tell you what I did with this money, so you can get an idea about some of the possibilities you might consider:
1. I opened an IRA with my financial institution and put all $%2,500 in a money market account.
2. My financial institution allowed me to open an S&P 500 index fund for a minimum initial investment of just $50, as long as I made recurring monthly investments of at least $50 into the fund. So I opened this fund and set it up to do 12 consecutive monthly investments of $200 from the $2,500 in the money market account. This would be $2,400 in total investments into the fund ($200 x 12).
3. At the end of the 12 months I had about $115 in the money market account -- the remaining $100 from the original $2,500 plus the interest that had accrued every month as the account balance dwindled from $2,500 to $100.
4. At the end of the 12 months my $2,400 in total investments had grown to about $2,700.
5. I sat on that position for several weeks until I saw that the S&P 500 was close to its record high. At this point my S&P 500 index fund had a balance of about $2,800. I sold off $2,700 of it and put all that money back into the money market account.
6. With about $2,825 now in the money market account and $100 in the S&P 500 index fund I did the same process all over again ... only this time I invested $200/month for 14 months, not 12.
7. I repeated this process several times over a few years. Each time, extended the investment period further to 16 months, 19 months, etc. ... until I had enough money to invest $300/month over the original 12-month investment period.
The key to this whole process is Step #5 ... because you have to make a prudent judgment about when would be a "good" time to sell. Don't be greedy and wait, because the best opportunity to capture short-term gains may not last long.* And don't be fearful and sell out if the S&P index drops, because that defeats the whole purpose of this approach.
* Once I had reached the end of the initial 12-month investment period, my strategy was to track the S&P on a daily basis and wait until the S&P was within at least 5% of its highest point for the 12 months I was making monthly investments, then sell out late on the next day as long as the market was about to close at least a bit higher.
> Zero mutual funds. <
Ah, but if you are buying many different stocks and bonds for each of your investors, you are the mutual fund!
See Post #37. That’s kind of what I had in mind when I developed that strategy.
As others have recommended, stash this windfall away for the moment [see final paragraph about IRAs] and then play the stock market for free with one of these simulation games. Run with this for several months and be mindful that you HAVE TO PAY ATTENTION to this unless you want to lose the investment.
If you find that it works for you, then look to put your windfall to work. For best results look at indexes / ETFs that have a low cost of ownership and a spread of risk over several investments. A good stock investment should have a normal return of 2-300% over bank account returns. If you keep an investment for over a year + a day, the profit will be taxed at capital gain rates, which could be a savings on your tax return.
A good place for the money might be to put this windfall in an IRA account right now. Gains & dividends there are shielded from taxation. If you do a 'traditional' IRA you may, depending on your income and employer retirement (401k) plan, get a reduction in the taxable income for that year but will be taxed when eligible to take out at retirement. If you go the Roth IRA route, then you get no current tax benefit but have no tax when eligible to withdraw. Read up on this online or get info from your bank or credit union.
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